IPO websites - harvesting investor details

How the scam works

1. These websites claim to help investors get early access to IPO investment opportunities. They may also claim to provide “top picks” of upcoming IPOs, or market trends and insights.

2. Site users are prompted to enter personal contact details and proposed investments into an online form. They are then told they will be emailed “alerts” about new IPOs, or be called by a representative.

3. Investors are then either convinced via email or telephone to invest, often being told that this is a ‘limited opportunity’, or that the price of shares will soon rise quickly. 

4. The investor will be asked to fill out application forms and provide identity documents such as a passport to open an account and satisfy relevant “Know Your Customer” requirements. 

5. The scammers email a Product Disclosure Statement (PDS) which does not meet the FMA’s requirements for PDS – for more information on PDS scams see the article: How to identify a product disclosure statement (PDS) or prospectus scam.

6. The investor will then be instructed to transfer their funds to a bank account or via cryptocurrency. Being asked to pay for shares via cryptocurrency is a red flag.

7. Often the victim only becomes aware they are part of a scam when the news of the impending IPO is never announced, their broker stops answering emails or they try to withdraw their investment.  

8. For more information on IPO’s and how they work see our article Spotlight on: IPOs.  You can also read a real life case study of a New Zealander who narrowly avoided being scammed in a fake Starlink IPO investment: Starlink fraud case study.